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Home » Business News, General Business News

PACRA Upgrades Entity Rating of AGP Limited

May 8, 2019

Lahore, May 08, 2019 (PPI-OT): The ratings reflect AGP’s strong business fundamentals. The pharmaceutical industry has witnessed a high rate of sustained growth over the years. Cost-efficiencies as well as demand inelasticity benefits the industry players. The latest price revision, and CPI-linked pricing criteria recently implemented, has indicated a positive sign for the sector. AGP’s core profitability is strong in comparison with most of the peers; any downward revision must remain range-bound. Ratings incorporate AGP’s strong and sizeable Cash flows and their adequacy to service the debt.

Consequently, debt servicing ratios and leveraging has improved. Interest coverage increased with an improvement in EBITDA and leverage reduced on account of debt repayments on its Sukuk. Debt metrics need to be upheld. Expansion strategies and strategic alliance with Mylan, to promote their product portfolio in Pakistan enables volumetric growth as well as growth in locally manufactured goods. Presence of OBS Group in the pharmaceutical sector provides strength, in the form of group synergies, to AGP’s positioning within the industry.

The ratings are dependent on continued sustainability of profits and improved market share. Adequacy of cash flows and availability of alternative resources to make debt-related payment remains critical. Meanwhile, compliance with internally-defined leveraging metrics is a prerequisite. Moreover, the instrument rating is dependent upon upholding of all major covenants.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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